Can apprenticeships help to drive UK productivity?

Productivitypuzzle.com recently looked at the issue of apprenticeships and whether or not they can drive productivity.

Research has shown that apprentices can add to a company’s productivity and encourage consumers to be more likely to pay more for goods and services.

But leading academics are saying that’s not the case. They have rubbished the government’s apprenticeship schemes saying apprentices can actually damage productivity.

Last year, a report from the Centre for Economics and Business Research revealed that productivity gains from employing an apprentice long-term average at £214 per week and jump to £401 in construction and planning, and £414 per in engineering and manufacturing.

In addition consumers prefer to do business with businesses employing apprentices. A quarter (25%) of consumers said that they would be more likely to pay more for goods and services offered by businesses employing apprentices

However, a leading academic rubbished the idea.

Graham Norton,Principal and chief executive at New College Swindon, dismissed apprenticeships in FE Week, writing, “Standards are uncertain and quality is, at best, ‘variable’,” questioning if the money spent was worth it, especially at the expense of adult learners.

Stephen Ibbotson, director of business at the Institute of Chartered Accountants, waded in with criticism. For SMEs, apprentices “can be detrimental to productivity because it takes experienced people to work with them, and they also sometimes struggle to get the calibre of apprentice they want”.

For Norton and Allan Cook, ATKINS chairman and vice president of the Royal Academy Engineering, there’s yet another issue: navigating the different government initiatives. “One thing’s for sure,” Norton explained, “the levy [enforced by the government on large businesses] and the Digital Apprenticeship Service will add complexity and additional costs to the process.”

The Department for Business Innovation and Skills released figures that showed a 13.7% decrease in apprenticeships in the 2013/14 academic year, compared to the previous year. That amounts to one in ten 18-year-olds securing an apprenticeship.

Was this a sign that most businesses agree with Norton and Ibbotson, or, as Steve Winder, regional VP for Epicor Software, points out, was the decrease “down to demographic trends, [and] the recession impact[ing] the financial viability of firms to invest in apprenticeship schemes”?

Winder likes apprenticeships, highlighting the financial benefits, which is especially true in engineering and manufacturing. These sectors, Winder says, see productivity gains of over £20,000 per annum. He breaks the numbers down even further: “…each apprentice is estimated to deliver an average positive net gain of £1,670 per annum to their employees.”

Those are encouraging figures. Winder goes on to point out other benefits. Employers can capitalise on the IT capabilities of a younger generation – “particularly significant as organisations are increasingly making use of technology to streamline day-to-day operations.”

Barclays and Nestles are a part of the Chartered Manager Degree Apprenticeship, addressing the problem of the UK’s quality of management.

Nestle head of talent acquisition Tom Banham, explained,”At the moment Nestle is relying on an ageing workforce; we don’t have talented individuals coming through and driving our organisation forward for the future. An example of that is 15% of our skilled manufacturing team in the next 15 years is coming up for retirement, so a lot of knowledge and management skills will be lost.”

For apprenticeships to work, as Winder writes, it’s paramount that employees bring quality and structured training to the table. Unipart Logistics is one such company. They’ve experienced tremendous success with its apprenticeship programme, which targets 16-to-18 year olds. Employees who started as apprentices now work across the business — some have even gone on to work as consultants for Unipart’s clients.

But Ibottson takes issue with apprenticeships for SMEs. Apprentices are considered a long-term investment, but it’s an investment that can pay off.

The Guardian, writing on why SMEs should consider apprentices, wrote, “Employers … report improved productivity and morale in the workplace, citing the enthusiasm and youthful approach apprentices bring. In addition, a Centre for Economics and Business Research study estimated that apprentices are worth around £214 per week to a business through reduced costs, improved quality of product and service, and better profit margins.”

The bottom line is, any size company has to commit to apprenticeships for it to work. Done right, and the UK’s future is assured.